Reverberations of housing crash make older millennials prefer stocks

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Older millennials and younger Generation Xers still feel the aftershock of the housing crisis, as more would rather invest in the stock market than real estate, according to Redfin.

The 35-44 year-old range was prime home buying age when the housing bubble popped, likely explaining why 52% prefer putting money in the stock market. Every other age range skewed toward believing real estate is the better investment of the two.

On the opposite end of the spectrum, ages 55-64 believe the most in real estate, with 62% choosing that investment class.

"The oldest millennials and youngest Gen-Xers entered their late 20s or early 30s during the housing crash, which explains why they are more skeptical about investing in real estate," Daryl Fairweather, Redfin's chief economist, said in a press release. "This generation experienced a major setback during the housing bust, which hit just as they were most likely to be getting married, starting a family and becoming a first-time homeowner."

Property values in 2018 went above the housing bubble peak, but home price growth is slowing. The stock market declines of December and year-over-year mortgage rate increases have added to the decelerated rate of home price growth.

Combining the falling prices with an increasing inventory and millennials' positive outlook on obtaining mortgages should push application and homeowner numbers in the coming years.

"Looking into the future, we expect to see homeownership increase as millennials enter prime home buying age. This is because millennials have a more favorable opinion of real estate as an investment than Gen-Xers, and millennials are a larger group than Gen-Xers," said Fairweather.

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Real estate investments Stocks Housing market First time home buyers Mortgage rates Redfin